“You Owe It To Yourself – Make The Call – No More Student Debt”
“The Federal program nicknamed Obama Student Loan Forgiveness may help you drastically lower your student loan payment–Learn more!”
“Speak With Certified Credit Counselors.”
Hmm… they're right. I DO owe it to myself. My work-life balance was not instantly gratifying at all last week. I just need something positive in my life right now until Starbucks has pumpkin lattes.
…Wait. Hold on. I think I see something on the website next to the picture of the super happy lady holding all of that money. If I squint really really hard and turn up the brightness on my computer screen I think I can read it:
WHAT?! You offer a paid service to help me understand some $hit I could just look up on Google and do for free?!
Annnnnnd that's the scam ladies and gentlemen. The unfortunate reality of the internet is that there is always someone trying to take your money for something you don't really need. It's like a [email protected]$$ amplification tool sometimes.
I've seen a lot of *incorrect* statuses on my Facebook timeline about student loan forgiveness lately, so what better way to correct those people than by doing it indirectly in a large public forum?
The three quotes that I found at the beginning of this post were from ACTUAL student loan “relief” companies that show up as sponsored suggestions in Google. There are a couple of things you should know if you are trying to tackle your student loan debt and want to avoid getting screwed over!
Here are three ways to spot student loan forgiveness scams:
1) They want your money
This one is pretty simple. Government-backed, legit student loan forgiveness programs are free. Now, unfortunately, that doesn't mean that you will actually qualify for any of them…but it won't cost you to find out.
These “debt relief” companies make money by convincing people to either pay a large one time fee of a $1,000+, or a monthly subscription to fill out some free paperwork for debt consolidation on your behalf. That would be fine (I love capitalism), but they generally pretend to be part of the government or promise that your loans will just magically disappear. ***SPOILER ALERT*** They won't. Sorry.
If they say they have your best interest in mind or they will find a customized, instant relief solution for you – they're lying. That's just fluffy crap to get you to pay them for something you can do on your own. There is no immediate way to have your loans erased even with the legitimate forgiveness programs.
2) They attempt to look like a government entity
Don't let “Federal” or a “.us” at the end of their URL fool you – these companies are private. Some of them even have a fancy shield logo that vaguely looks like something the government would use, with a tiny disclaimer that states the company is not affiliated with the government in any way.
The Department of Education is the only entity that can forgive or consolidate your federal student loans. Period.
That's not to say that it isn't complicated and unbelievably hard to wade through the first time you try to digest all of the information that the Department of Education website provides. But any company that pushes loan forgiveness as a service is probably too good to be true.
3) They blitz you with ads
Facebook ads, Google, whatever. If they are targeting you with ads, it's probably a for-profit company in one way or another. Just so you know – the government completely sucks at getting the word out about their legitimate loan forgiveness programs (which is one reason student loan blogs do so well).
Uncle Sam probably won't be retargeting you on Facebook anytime soon. That would take…organization and stuff.
So what can you actually do to save money on your student loans?
- If you have a solid job and are comfortable financially, a refinance could be a great option for you while interest rates are so low. My recommendation is to go through Credible (it's free). They're literally the only rate comparison company I trust enough to allow on this site. You can use their comparison app through my exclusive link.
- Go to the Department of Education website and start snooping around. There is a TON of information to wade through, but you can be confident that it's 100% legit. There's no reason to risk your personal information for a debt relief scam.
About Millennial Money Man
Bobby Hoyt is a former band director who paid off $40,000 of student loan debt in 18 months on his teaching salary and then left his job to run Millennial Money Man full-time. He helps other Millennials earn more through side hustles, save more through budgeting tools and apps, and pay off debt. He is a personal finance expert who has been seen on Forbes, Reuters, MarketWatch, CNBC, International Business Times, Business Insider, US News, Yahoo Finance, and many other personal finance and entrepreneurship media outlets.
Comments
The Green Swan
I always remind myself of the advice my college professor gave me, that if it sounds too good to be true then it isn’t true. It can be hard not to be tempted by scams though. Thanks for the post!
Millennial Money Man
Yep, that’s pretty much it when it comes to this stuff! There really aren’t a ton of options for student loan forgiveness honestly. I didn’t even get into how difficult it was to actually make it through each program.
Jeff Mohn
I’ve actually tried to refinance through SoFi before and apparently my state (Pennsylvania) won’t allow private student debt consolidation unless your balance is over $25k – Ever hear of such crazy rules? I graduated with $24k in loans so I was ineligible from the start. Anyway, I did my own consolidation for both my wife’s and my loans shortly after college and we do an annual update on income for PAYE (really just to keep my minimum payment down to boost my credit score) and in all honesty, I can understand why someone wouldn’t want to have to deal with the government loan servicers and programs directly.
Millennial Money Man
That doesn’t surprise me at all haha. There are so many crazy regulations with student loans in general, it’s a pretty disorganized mess unfortunately. As a very serious non-plug – that’s actually why I work with Lendedu. They give readers 12 different options on loan rates…just cuts down on some of the BS of searching in my opinion. Individual companies like SoFI pay MUCH higher lead commissions but it’s not as useful for my people. 🙂
Gail Poyner
I have a decent bit of student loans left to pay, and I’ve seen these advertisements everywhere. I think the Green Swan said it best, if it sounds too good to be true then it isn’t true. Thanks for the great article!
P.S. Love the gif. Gave me a solid chuckle.
Millennial Money Man
Hahaha I know I LOVE that gif. My wife showed it to me the other day and I knew I had to put it in a post somehow. 🙂
Preston @TheDrunkMillionaire
Thanks for the post! I think when people are in untenable positions (i.e. 100K in student loans), these type of scams become much more convincing.
Millennial Money Man
Yep – I’ve talked to plenty people that feel desperate. The unfortunate reality is that it’s just better to go through the government or a legit refi company rather than get screwed out of potentially thousands of dollars.
Christa Szabo
I know I went through a loan forgiveness program, but I guess I was lucky and was able to find the department of education’s program. I had to pay $500 up front, but that was it and for the past two years I’ve watched my student loans decrease by about $20,000. I’m hoping tactically start paying them off next year and be done with it, but my forgiveness really has been a lifesaver
Millennial Money Man
Whew glad it worked out for you. That’s fairly low compared to some other companies…but I still wouldn’t recommend it honestly (sorry not trying to make you feel bad or anything)! Which loan program did you get into? Or did you use a “relief”company?
Christa Szabo
It’s ok, no offense taken. You’re right, i DID get lucky seeing as it WAS a facebook ad i called lol. To be honest, I’m not entirely sure. I believe it was FedLoans because when I go onto credit karma, the only school loan I still have open is my FedLoans account. But good news, I’m now owe less than $60,000 on all of my debt and when I started reading your blog I was over! So though it’s a slow road, I can at least see progress now and every little bit counts. I did send this article to my fiance seeing as he too has student loans and has been asking me which company I used so thank you for writing this article. It will help BOTH of us stay away from any more student loan scams and help us make better choices
Millennial Money Man
Every little bit does count! Glad you’re tackling the loans. I’m sure your Etsy business will help with that!!!! Thanks for sharing the article 🙂
Christa Szabo
I hope it does too!!! No real bites on it yet, but perhaps I also caught the impatience fever going around lol
Millennial Money Man
You’ll get there!
Finance Solver
I hate companies offering products that offer no value in return. They’re almost like predators taking advantage of people in debt wanting to get out. It’s amazing how these companies even survive (pet rocks, anyone?).
Great tips on spotting a scam and saving a lot of money in the process!
Millennial Money Man
That’s pretty much exactly what they are! The real problem is that the government has done a horrific job of getting the information out there about student loan forgiveness. It creates white space for these fools to creep in and start hustling people.